Sustainable Development and the Insurance Industry

Transcription

1 Sustainable Development and the Insurance Industry Presentation at the Sustainable Finance Forum Turkey, 16 May 2014 Dr. Astrid Zwick, Head Corporate Responsibility, Munich Re Group

2 Contents Relevance of corporate responsibility for the insurance industry A global voluntary framework - Principles for Sustainable Insurance (PSI) Munich Re framework to integrate ESG aspects Corporate Munich Re 2

3 Environment pollution impacts bears high economic costs Source: AP EU*: Cost of damage caused by emissions from industrial facilities in Europe at least EUR billion in 2009 US**: costs to regulate air pollution $7 billion a year; health benefits range from $19 billion to $167 billion * Source: European Environment Agency Report **Source: US Environmental Protection Agency, in the Economist, March 2013 Corporate Munich Re 3

4 Megacities have challenges in environmental and social terms Source: UN 2002, Draft and Copyright: F. Kraas, Cartography: R. Spohner Since 2012: more than 50% of world population living in cities (e.g. approx. 80 % of Brazil s population - currently 196 million) Challenges: efficient infrastructure, secure and affordable power supply, provision of smart grids, sustainable mobility, greener buildings, bridging income disparity. Corporate Munich Re 4

5 Climate change caused by increased carbon emissions is real with huge economic losses Example hurricane Sandy 2012 Source: Peter Höppe Region Total losses Insured losses Fatalities USA US$ 69bn US$ 30bn 110 Corporate Munich Re 5

6 Increasing relevance of corporate responsibility for stakeholders and as a competitive advantage Regulation Increase in national CR reporting legislation (e.g. EU, F, D, UK, NL, S-Africa) Climate regulation on the rise (e.g. UK Carbon Commitment, China, India) Capital market / Shareholders Increase of SRI investments Increased demand for information, also by mainstream investors (e.g. Goldman Sachs) and our shareholders Customers Increased demand for transparency Change in customer behaviour (e.g. LOHAS*) Peers CR increasingly considered a strategic element and business opportunity Structured approach and central governance boost CR topics Public/NGOs Increased media attention amplifies reputational risks and demand on ethical standards * LOHAS = Lifestyle of health and sustainability Corporate Munich Re 6

7 The insurance industry uniquely positioned to tackle environmental, social and governance issues Global survey of insurance practitioners* support that: Sustainable insurance is not about philantropy Environmental, social and governance (ESG) issues are material to all lines of business ESG management increases corporate value through enhanced risk management and new business opportunities Risk manager Risk carrier ESG issues Investor Sustainable insurance is about insurance industry core competence: to identify / quantify risks & provide solutions *Source: The Global State of Sustainable Insurance, UNEPFI, Insurance Working Group, 2009 Corporate Munich Re 7

8 Munich Re supported the development of the Principles for Sustainable Insurance (PSI) ESG across industry sectors UN Global Compact Principles ESG across financial sectors (banking, insurance and investment) UNEP Finance Initiative Statements ESG by financial sector Equator Principles Proposed UNbacked Principles for Sustainable Insurance Investment framework UN-backed Principles for Responsible Investment Climate change by financial sector Climate Principles Climate Principles ClimateWise Principles Climate Principles *Source: UNEPFI Insurance Working Group, 2009 Corporate Munich Re 8

9 Contents Relevance of corporate responsibility for the insurance industry A global voluntary framework - Principles for Sustainable Insurance (PSI) Munich Re framework to integrate ESG aspects Corporate Munich Re 9

10 Principles for Sustainable Insurance (PSI) A voluntary and aspirational global framework for the insurance industry 1. Embed ESG in decision-making along the value chain 2. Work together with clients and business partners to raise awareness, reduce risk and develop solutions 3. Engage with governments, regulators and other key stakeholders 4. Demonstrate accountability and transparency Principle 4 Reporting Principle 3 Society Principle 2 Insurance industry value chain Principle 1 Business principles, strategies and operations Corporate Munich Re 10

11 Global launch of the PSI: 19 June 2012, Rio de Janeiro, Brazil *Source: PSI, 2012 Corporate Munich Re 11

12 Growth in PSI membership (June 2012 to March 2014) Gross premiums written Gross premiums written Jun-12 Mar-14 About USD 500 billion or 10% of 2011 world premium volume About USD 660 billion or 15% of 2012 world premium volume 68 Total assets under management Total assets under management About USD 5 trillion About USD 8 trillion PSI signatory companies PSI supporting institutions PSI membership (signatories + supporters) *Source: PSI, 2014 Corporate Munich Re 12

13 PSI signatory companies (country of domicile) Founding signatories 1. Achmea (Netherlands) 2. AEGON (Netherlands) 3. Aviva (United Kingdom) 4. AXA (France) 5. Bradesco Seguros (Brazil) 6. Delta Lloyd (Netherlands) 7. ING (Netherlands) 8. Insurance Australia Group (Australia) 9. Interamerican Hellenic Insurance Group (Greece) 10. Itau Seguros (Brazil) 11. La Banque Postale (France) 12. MAPFRE (Spain) 13. Mitsui Sumitomo Insurance (Japan) 14. Mongeral AEGON (Brazil) 15. Munich Re (Germany) 16. RSA Insurance Group (United Kingdom) Status: March Sanlam (South Africa) 18. Santam (South Africa) 19. SCOR (France) 20. Sompo Japan Insurance (Japan) 21. Sovereign (New Zealand) 22. Storebrand (Norway) 23. SulAmerica (Brazil) 24. Swiss Re (Switzerland) 25. The Co-operators Group (Canada) 26. Tokio Marine & Nichido Fire Insurance (Japan) 27. Zwitserleven (Netherlands) Signatories after PSI launch in June Allianz (Germany) 2. AmGeneral Insurance (Malaysia) 3. ASR Nederland (NL) 4. Atlanticlux (Luxembourg) 5. Banco Santander (Spain) 6. Continental Re (Nigeria) 7. Custodian & Allied (Nigeria) 8. FATUM Schadeverzekering (Suriname) 9. Grupo Segurador Banco do Brasil e MAPFRE (Brazil) 10. HSBC Insurance (UK) 11. Peak Re (China) 12. Porto Seguro (Brazil) 13. Seguradora Lider (Brazil) 14. TAL (Australia) 15. Terra Brasis Resseguros (Brazil) Corporate Munich Re 13

14 Review of macro trends Annual PSI membership survey Annual PSI stakeholder survey PSI annual public disclosure of implementation PSI annual report on progress PSI membership growth The PSI strategy for Moving from aspiration to transformation Vision Purpose Goal 1: Collaborative action (external) Goal 2: Implementation support (internal) Goal 3: PSI operations (governance) Sub-goals 1 Sub-goals 2 Sub-goals 3 Promote the PSI Initiative and engage stakeholders Develop and implement projects and activities that focus on understanding and managing ESG risks Understand and develop solutions to address members pain points Member exchange programme Cost-efficient delivery Measure and report on the impact of the PSI Initiative on advancing ESG issues and the value created for members Embed a learning culture to foster continuous improvement Projects and activities Annual PSI member exchange programme Measuring the performance of the PSI Initiative Source: PSI Strategy

15 Contents Relevance of corporate responsibility for the insurance industry A global voluntary framework - Principles for Sustainable Insurance (PSI) Munich Re framework to integrate ESG aspects Corporate Munich Re 15

16 Added value within the group Diversified structure More security Munich Re (Group)* Reinsurance Munich Health Primary insurance Corporate Insurance Partner Great Lakes Reinsurance (UK) PLC KA Köln.Assekuranz Agentur GmbH MSF Pritchard Syndicate 318 Temple Insurance Company Watkins Syndicate Belgium Asset Management * This listing is incomplete and provides no precise indication of shareholdings. Corporate Munich Re 16

17 Corporate Responsibility is part of our core principles Five action fields in accordance with our commitments Strategy and governance Corporate responsibility in business Environmental management Corporate citizenship Reporting and communication CR 1 objectives and fields of action Compliance with UN Global Compact Principles Integration of CR issues into (re)insurance business (PSI 2 ) Integration of CR into asset management (PRI 3 ) Group-wide CO 2 neutrality Global environmental management strategy Active governance of social responsibility and community involvement Group-wide CR web portal Group-wide CR reporting Position in major SRI ratings Core activities Action guidelines Sustainable value creation is key to the success of our business model. In this sense, corporate responsibility has been and will always be an integral part of our Group strategy. We put quality before quantity, enabling us to achieve profitable, long-term growth. Nikolaus von Bomhard, CEO 1) CR = Corporate Responsibility 2) PSI = UN Principles for Sustainable Insurance (signed by Munich Re in 2012) 3) PRI = UN Principles for Responsible Investment (signed by Munich Re in 2006) Corporate Munich Re 17

18 A framework to integrate ESG aspects into business strategies Corporate responsibility governance ESG aspects Sensitive business issues Initiatives across business fields and investments Reinsurance Munich Health ERGO MEAG Focus on underwriting process and guidelines, client engagement Focus on primary insurance units and exchange of best practices Focus on sustainable products, sales and underwriting process, compliance Adherence to PRI (sustainability quota and new reporting format) Sensitisation PSI reporting PRI reporting Corporate Munich Re 18

19 Environmental, social and governance (ESG) aspects Pollution Environment Natural resources & biodiversity Social Political context and public awareness Labour and working conditions Health, safety and security for the community Displacement of people Cultural heritage Governance Responsible and correct planning & evaluation Compliance Consultation and transparency Corporate Munich Re 19

20 Sensitive issues bear risks Banned Weapons Policy on Cluster Munition and Land Mines ESG Criteria for Engineering ESG tool for engineering / large infrastructure projects Oils sands Position paper including specific questions on ESG aspects Fracking Position paper including specific questions on ESG aspects Mining Master Thesis: ESG aspects in the mining industry Arctic Oil Drilling Position paper in process in collaboration with Marine Tax Haven Investments in Farmland ESG country rating: ESG information included in MR Country Risk Assessment Corporate Munich Re 20

21 ...but corporate responsibility also means business opportunities Products and services according to business field specialty REINSURANCE Climate change Nathan Risk Suite Agro Systems New coverage concepts in the area of renewable energy Public-private partnership Weather-index-based insurance Desert power CO 2 -free power generation in North Africa MUNICH HEALTH Access to insurance Managed care & prevention Pilot product example: specific solutions for special groups such as Down (DKV Integral Sin Barreras) Inclusive business model Fundación Integralia ERGO Life insurance Unit-linked life insurance with investment in SRI products Motor insurance 10% premium rebate for environmentally friendly cars Microinsurance Range of insurance products (e.g. property, personal accident, crop) Mobile-phone-based insurance solutions MEAG Sustainability anchored in Global Investment Guidelines Investment in renewables and infrastructure Provision of sustainability funds for third parties ESG country rating Corporate Munich Re Corporate responsibility in (re)insurance business, 15 October

22 For more information visit our Corporate Responsibility Portal at Corporate Munich Re 22

23 Questions for discussion? Why is the PSI Initiative relevant and what is the benefit to join it? What does it mean to implement the PSI? How can Corporate Responsibility (CR) be successfully integrated into corporate strategies and into daily work of e.g. an underwriter? What are major challenges to implement CR in core business?. Corporate Munich Re 23

24 2013 Münchener Rückversicherungs-Gesellschaft 2013 Munich Reinsurance Company Thank you very much for your attention 16 May 2014 Dr. Astrid Zwick Head Corporate Responsibility, Munich Re Group